Correlation Between Procter Gamble and Equity Income
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Equity Income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Procter Gamble and Equity Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Equity Income Fund, you can compare the effects of market volatilities on Procter Gamble and Equity Income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Procter Gamble with a short position of Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Equity Income.
Diversification Opportunities for Procter Gamble and Equity Income
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Equity is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income and Procter Gamble is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Procter Gamble are associated (or correlated) with Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Procter Gamble i.e., Procter Gamble and Equity Income go up and down completely randomly.
Pair Corralation between Procter Gamble and Equity Income
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 1.45 times more return on investment than Equity Income. However, Procter Gamble is 1.45 times more volatile than Equity Income Fund. It trades about 0.28 of its potential returns per unit of risk. Equity Income Fund is currently generating about 0.25 per unit of risk. If you would invest 16,717 in Procter Gamble on August 30, 2024 and sell it today you would earn a total of 1,219 from holding Procter Gamble or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Procter Gamble vs. Equity Income Fund
Performance |
| Timeline |
| Procter Gamble |
| Equity Income |
Procter Gamble and Equity Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Equity Income
The main advantage of trading using opposite Procter Gamble and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Equity Income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Equity Income will offset losses from the drop in Equity Income's long position.| Procter Gamble vs. The Clorox | Procter Gamble vs. Colgate Palmolive | Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Kimberly Clark |
| Equity Income vs. Shelton Funds | Equity Income vs. Growth Fund Of | Equity Income vs. Rbb Fund | Equity Income vs. Issachar Fund Class |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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